TaxTMI 
TaxTMI 
2025 (6) TMI 44
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....9;the Act') dated 12.02.2024 pertaining to Assessment Year 2018-19. 2. The orders of the authorities below reveal that the revisionary power was exercised by the Ld. PCIT noting that when the assessment was finalized in the case of the assessee for the impugned assessment year i.e. 2018-19, the AO had disallowed unsecured loans of Rs. 6,19,88,853/- since the identity, creditworthiness and genuineness of the persons from whom the loan was taken was not proved, however, the interest paid on the unsecured loan amounting to Rs. 45,63,779/-, which was debited in the P&L account was not correspondingly disallowed by the AO u/s.37 of the Act. 3. Before the Ld. PCIT, the assessee contested the revisionary power exercised stating that the ....
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.... the provisions of the Income-tax Act as admissibility of deduction of an expenditure debited to P&L account depends on the relevant provisions of the Income-tax Act and section 36(1) (iii) provides that expenditure on account of interest on money borrowed is allowable as deduction in computation of business income. The assessee has further submitted that the amount of Rs 6,19,88,853/- by way of unsecured loan has been utilized for purpose of business and no part of the borrowed fund has been diverted for non- business purpose. So the expenditure on account of interest amounting to Rs. 45,63,779/- is fully allowable and has been rightly allowed by the A.O. 7.3 It is observed from the assessee's submission that it has only submi....
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....ng grounds: "1. The Learned Pr. Commissioner of Income Tax-3, Ahmedabad has erred in passing an order us 263 of the LT. Act, 1961 setting aside the Assessment Order passed us. 143(3) r.w.s. 1448 of the LT. Act, 1961 did.13.09.2021 and directing the Assessing officer to make fresh assessment order making disallowance of interest of Rs. 45,63,779/- claimed by appellant in Profit and loss account on unsecured loans u/s 37 of the Act. 2. The Learned Pr. Commissioner of Income Tax-3. Ahmedabad has erred in passing an order w/s 263 of the LT. Act, 1961 since the issues sought to be revised have been examined in the assessment proceedings hence the same being illegal and bad in law requires to be quashed 3. The Learned P....
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....ddition made by the Assessing Officer in respect unsecured loans while completing the assessment u/s. 143(3) of the Act. 7. The Learned Pr. Commissioner of Income Tax 3, Ahmedabad has erred in assumption jurisdiction and initiated revision proceedings u/s. 263 of the Act on issues which are subject matter of appeal. " 6. During the course of hearing before us, the solitary argument raised by the Ld. Counsel for the assessee was that in terms of the provisions of Section 263 of the Act, the Ld. PCIT was required to go through the records and arrive at his finding of the assessment order being erroneous so as to cause prejudice to the Revenue. That in the facts of the present case, the Ld. PCIT had not gone through the records sin....
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....hesitation in holding that the Ld. PCIT has rightly found the assessment order to be erroneous causing prejudice to the Revenue in not having disallowed the interest pertaining to the unsecured loans held to be ingenuine by the AO. 8. We do not find any merit at all in the plea of the Ld. Counsel for the assessee that the jurisdiction assumed by the Ld.PCIT u/s 263 of the Act was not as per law since he had not perused the records of the assessee to see whether the unsecured loans added to the income of the assessee included interest component or not, before assuming jurisdiction. The facts evident on record that unsecured loans were treated as ingenuine but interest paid on the same was not disallowed by the AO, the Ld. PCIT, we hold, h....